GDP to grow 2.11% this year, CIER says

FORECAST HIKES:Drastic changes in global crude oil prices would hurt growth, but that is unlikely given global inventories and US shale oil production, the CIER president said

By Lauly Li / Staff reporter

The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its forecast for this year’s GDP growth from 1.73 percent to 2.11 percent, saying that the recovering global economy would benefit the nation’s exports and private investments.

“The stronger-than-expected momentum of the global economic recovery was the main reason CIER increased the forecast,” CIER president Wu Chung-shu (吳中書) told a news conference in Taipei.

With the nation’s exports’ performance steadily gaining momentum since the second half of last year, CIER is also raising its estimate for this year’s exports, Wu said.

CIER is the second think tank after Yuanta-Polaris Research Institute (元大寶華綜經院) to estimate that the nation’s GDP growth is to surpass 2 percent this year.

The Directorate-General of Budget, Accounting and Statistics (DGBAS) in February said it foresees 1.92 percent growth this year, while the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) forecast 1.78 percent growth.

The IMF on Tuesday night said it would maintain its 1.7 percent GDP growth forecast this year for Taiwan.

Commenting on the IMF’s relatively conservative estimate, Wu said that although the economy is improving, there are uncertainties that might affect the nation’s economic growth.

Wu said he assumed the IMF has taken into account the pace of the US Federal Reserve’s interest rate hikes, northeastern Asia’s geopolitical dynamics and China’s continuing efforts to transform its economy.

Any drastic fluctuations in international crude oil prices would also influence Taiwan’s growth, Wu said, adding that as long as oil prices remain relatively stable, it will benefit the economies of Taiwan and the rest of the world.

As the US continues to extract shale oil and the global inventory for oil products remains relatively high, Wu said he foresees no sharp surges in international crude oil prices.

CIER forecast first-quarter GDP growth of 2.76 percent, supported by exports and industrial production momentum extending from the second half of last year, Wu said.

Growth is expected to slow to 2.17 percent this quarter, 1.83 percent next quarter and 1.75 percent in the final quarter of this year, due to a higher comparison base last year, Wu said.

In addition, CIER forecast GDP growth next year of 2.15 percent, the first time the institution has released an estimate for next year’s economic growth.

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